Thursday, 11 September 2003

Dwight Klingenberg has a survey of the winners and losers from the fall out of the first year of Sarbanes Oxley. Some surprises, like private companies being on the loser list, even though they aren't covered, and have you heard of the Treadway Commission? One of the winners. Check out his article here. Not surprisingly, one of the tips is to stay on top of the HR issues caused by Sarbanes Oxley.

The Fifth Circuit remains a court that is favorably disposed to arbitration as a condition of employment. In Hadnot v. Bay, Ltd. (5th Cir. 9/11/03) [pdf] the arbitration agreement banned the arbitrator from awarding exemplary and punitive damages. Since such a claim would be permitted under Title VII, the basis for the suit, Hadnot argued that the agreement should not be enforced. Rather than disallowing arbitration, the district court struck the ban on the arbitrator's authority and ordered that the case be arbitrated. The Fifth Circuit upheld the action, finding that now that punitive damages were authorized, there was no reason not to require arbitration.

The Fifth Circuit also rejected Hadnot's contention that there was no consideration, relying on the famous language in Light v. Centel Cellular that a promise which depends on continued employment is illusory, so that no employment at will agreement can support a contract. The Fifth Circuit holds it is In Re Halliburton not Light which controls. The agreement was made at the time of hiring, and both parties were bound no matter how long or short the employment might be.

Wednesday, 10 September 2003

The 1991 Civil Rights Act which added increased clout for those bringing discrimination claims, including the right to compensatory and punitive damages and jury trials to name just two items, may actually have resulted in making it harder for minorities to be hired in traditionally white male dominated job markets. At least that is the theses of an article [pdf] by Paul Oyer of Stanford University published in the Summer 2003 issue of Regulation magazine. The Atlantic's Stuart Taylor, Jr. discusses the article in his Legal Affairs column.

Here is the money quote that Taylor takes from Stanford Law Professor John J. Donahue III:

"Once the egregious discrimination is gone," Donohue says, "then litigation-based schemes to bring ever more fairness become more burdensome and of dubious effectiveness. Litigation is a crude weapon;you can't perform surgery with a saber. Unfortunately, Title VII has become a matter of religious dogma for many academics, and certainly for those who benefit;plaintiffs' lawyers and consultants;and therefore immune to any type of critical inquiry."

Those who have toiled in the employment litigation arena know all too well the truthfulnessess of those words. But as today's, at least temporary defeat of an attempt to change outdated wage and hour regulations show, the idea that Congress will ever roll back any benefit it has provided, regardless of the harm that it might be causing, is most unlikely.

Healthsouth Corp., which has not been faring well for other reasons, has another bad day with an adverse verdict in an employment law case brought in Montgomery County, Texas, which is just outside Houston. Dr. Helen Schilling, the former medical director at a rehabilitation center claimed she was terminated for refusing to engage in illegal conduct by extending the stay of patients or hospitalize patients who did not need it in order to keep a minimum level of census. HealthSouth argued she was terminated because she was hard to get along with and will ask the court to overturn the jury's award of $465,000 for back pay and mental anguish and $1.05 million in punitive damages. You can check out the story in Yahoo news.

The lawsuit brought by the family of a young girl who was killed by an associate of Cooley Godward who was driving while talking on a cell phone goes to trial next week. Law.com has the story. Although the facts relating to the law firm's liability are complicated by the criminal charges that were brought against the lawyer, it is inevitable that many employers will face this kind of suit in the future.

The Harkin amendment which has the effect of barring the DOL's proposed change to the white collar exemptions has passed the Senate by a vote of 54-45. See the story in US Today. The bill will now go to conference committee with the threat of a Presidential veto if the language is not removed. It will be several months before the ultimate fate is known, but given the coming political campaign this may be an idea where the time for change is long past due, but may still not have come.

An employee was hired as a flat bed truck driver, even though he had a severely crushed hand which led to a 20% disability pension from the Army. When he was terminated for violating a safety rule, he claimed that the employer called him "crippled, disabled and handicapped." He sued under the ADA, not claiming he was actually disabled, only that the employer considered him disabled. Accepting for purposes of the ruling that the employer used those words, the Court still found no violation of the ADA. They all fall within "a range of meanings" and are not sufficient to show that the employer thought the employee was so far disabled as to meet the ADA statutory definition. It is that level required to meet the "perceived as disabled" standard. Tockes v. Air-Land Transport Services, Inc.. (7th Cir. 9/9/03) [pdf]. Chief Judge Posner commented that rather than being made in a case where an employee had been hired with an existing disability as here, a perceived disability claim would be more likely where an employee suffered an injury which the employer viewed as disabling when it was not.

Tuesday, 9 September 2003

Political disputes often lead to interesting law issues. That appears to be what happened in Shotz v. City of Plantation, Florida (11th Cir. 9/8/03) [pdf]. Shotz, an ADA expert, surveyed a Community Center at the request of one of the council members and wrote a letter to the council member reporting numerous ways it was not in compliance with the ADA. The council member provided a copy to the Mayor and ultimately others received it as well. Unhappy with the report, an assistant city mayor authorized an investigation into Shotz' background which included hiring a private investigator and authorizing the city attorney to conduct a data base search. Ultimately, information about Shotz' "criminal, credit, and driving records, medical history, involvement in professional disciplinary and other civil proceedings, property ownership, social relationships, including an ongoing conflict with a neighbor, as well as a criminal report involving his wife," were made public.

Shotz sued several individuals under the anti-retaliation provisions of the ADA. Although noting there were numerous cases holding that individuals are not liable for violations under the ADA employment provisions, the Court found that the retaliation provision under the public accommodations section was not so limited. It also raised the question, although not deciding it, whether individuals might be liable under the retaliation provisions even for employment related matters.

Besides making one cautious about doing favors for a council member, the case is also a good lesson for the dangers of investigating someone's background. The regulatory framework is broad enough that some legal problem is almost certain to be created.

Reversing a summary judgment, the 9th Circuit proves how fact intensive ADA cases are by its lengthy discussion of plaintiff's diabetes, which is classified as 'brittle' and which requires a strict monitoring of any food intake, often requiring her to test her blood sugar to ensure proper levels. Fraser v. Goodale (9th Cir. 9/8/03) [pdf]. Under these circumstances, the Court found that eating was a major life activity which was significantly limited. In an effort to ward off claims the Court specifically made clear it was not inviting those on a diet to complain that their major life activity of eating was threatened, but emphasized the unique circumstances of this case.

At least under the special circumstances laid out in detail in De Ascenscio v. Tyson Foods, Inc. (3rd Cir. 9/8/03). In an opinion that would provide a great exam question for a law school class on federal courts, the 3rd Circuit held that the district court had abused its discretion in exercising supplemental jurisdiction over a class action claim under the Pennsylvania Wage Payment & Collection law, where the primary jurisdiction rested on a collective action under the FLSA.

The opinion also provides a good discussion of the differences between opt-in classes, which have been chosen by Congress as the method for use in FLSA actions vs. opt-out class under Rule 23.

California legislators have sent another bill to Governor (at least for a little while longer) Gray Davis which labor supports and business strongly opposes. The Sacramento Bee has the story on Assembly Bill 76 which would make employers responsible for sexual harassment of its employees by customers or third parties "if employers -- or their agents or supervisors -- knew or should have known of the harassment and failed to take immediate action to stop it." This would reverse a 2-1 decision of an intermediate appellate court which is currently pending review by the California Supreme Court. I mentioned the original decision here last year, as well as an academic critique.

It seems unlikely that Governor Davis would choose not to sign this bill giving the current make up of his support in next month's recall election.

Monday, 8 September 2003

Basically applying the sports rule of no harm, no foul, the Court rejected the mechanical application of the alter ego rule even where companies are "joined at the hip." It affirmed the district court's finding that where a non-union company set up an installation company to do union work,that the alter ego doctrine should not be applied to make the non-union company contribute to benefit funds when it subcontracted with non-union contractors. The union had argued that the non-union company was in violation of a series of collective bargaining agreements it had with the installation company. Massachusetts Carpenter Central Collection Agency v. A.A. Building Erectors, Inc. (1st Cir. 9/8/03) In the Court's view, the union was never in a position that was worse than before the collective bargaining agreements were made and applying the alter ego rule in this situation would be inequitable.

Probably not in those words, but the Texas Supreme Court has made clear that mere flaws in an investigation alone are not enough to provide an inference of discrimination on the basis of a protected class. Last week's decision in Wal-Mart Stores, Inc. v. Canchola (Tx. 9/4/03) reversed a jury verdict which had been affirmed in an opinion [pdf] of the Corpus Christi Court of Appeals. A long tenured deli manager, who had been forced to work a reduced schedule because of a heart condition, was accused of sexual harassment. The store manager conducted an investigation and obtained statements concerning the allegations and then terminated the deli manager for violation of the sexual harassment policy. At trial, the deli manager raised numerous questions about the thoroughness and accuracy of the investigation.

The Supreme Court noted that it had a long policy of encouraging employers to conduct investigations before exercising their right to terminate at will employees, by not making them liable if their investigation were subject to challenge as imperfect. Recognizing the slippery slope of trying to draw lines about how good an investigation must be to pass muster, the Supreme Court wisely avoided trying to do so. Instead, the Court noted that the question to be asked was not merely whether there was pretext, but what the pretext was for. In order to support the jury's finding of disability discrimination, the Court held there must be some evidence that there was discrimination on the basis of a disability. Finding none, that claim was reversed.

The Court also reversed the jury's finding of intentional infliction of emotional distress. Noting that while the investigation and termination were undoubtedly unpleasant, an employer must be free to investigate and supervise its employees.

Sunday, 7 September 2003

OnQue, a vendor of COBRA administration software, has a message about, surprise, the dangers of failing to administer COBRA correctly. Notwithstanding their bias, they do have a good point in their article dealing with a 3rd Circuit summer decision, Emilien v. Stull (3rd Cir. 7/18/03) [pdf]. The scary thing for lawyers charged with assisting employers comply is that the court is now requiring a 'comprehensible' notice. Law schools may need to radically revise their curriculum.

Friday, 5 September 2003

The Corpus Christi Caller News has this story on Judge Terry Canales of the 79th District Court, which covers several South Texas counties. A review by a panel of appellate judges upheld a recommendation that he be removed from office because of misconduct involving sexual harassment. The panel did criticize certain procedural aspects of the Commission on Judicial Conduct's review which led to the recommendation. Judge Canales status while the matter is appealed to the Texas Supreme Court is unclear, although the Judicial Commission "assumes" he will be suspended during the appeal.

Wednesday, 3 September 2003

The Plaintiffs bar frequently laments the barriers of the the 5th Circuit, but it is not always a burial ground for employee's complaints. Today, the 5th Circuit re-instated a jury's age discrimination verdict, reversing the trial court's granting of judgment notwithstanding the verdict. The unfortunate defendant in this case was Haggar, which as I noted a couple of weeks ago, has not fared all that well in the court house. In Palasota v. Haggar Clothing Co. (5th Cir. 9/3/03) [pdf], the Court faulted the district court for not giving enough weight to remarks by management relative to age, instead passing them off to stray remarks. It also noted that the court should have given more weight to the EEOC determination of cause based on a 2 1/2 year investigation. All in all, while plaintiffs and their counsel would probably appreciate reversals of summary judgments against them, no doubt they are happy to see that when they do get to trial, and do get a verdict, that the 5th Circuit will be supportive if in fact their is evidence in the record. Of course, learning that same lesson is important for employers and their counsel as well.

For fans of divided and it appears frequently stalemated government, Harkin's proposal is an amendment to the appropriations bill for Health and Human Services, which President Bush has threatened to veto if it has language which would scuttle reform of the wage and hour regulations. This issue was decided by only three votes in favor of reform in the House. Stay tuned for this one.

Forgetting, or not knowing, that breaks that are shorter than 20 minutes have to be compensated cost hotels.com. HR Next has the report on the results of the DOL investigation into the company's practice of deducting for the two fifteen minute breaks it "gave" its call center operators each day.

An operating room is a place of high drama, and if one can believe what one hears and reads, often a place of high jinks as well. In what may be a story that feels way too close to home to many hospital administrators, it took a Norfolk, VA jury only 90 minutes to award $4 million to a nursing manager who was asked to resign after counseling an OR nurse because of the "sexually charged" environment in the OR. The nurse had been seen kissing and hugging a doctor and massaging his neck, back and legs. The nurse resigned after the counseling and threatened legal action.

Shortly thereafer the nursing manager, Stephanie Denninghoff, was asked to resign and six days later, the nurse was rehired. The Virginian Pilot has the full story. Although not mentioned in the story, my guess is that most administrators are asking themselves what role the physician may have played in all this.

The closing argument that was apparently not in tune with this jury was the hospital's lawyer's explanation of what happens in the tense environment of the operating room:

``You get some relief sometimes through a variety of physical contact,'' he told the jury during closing statements. ``What evidence is there of a sexually charged environment? It was just hugging.''

Tuesday, 2 September 2003

Forget the campaign of Arnold and others, one interesting question that will be known soon is how Governor Davis has been impacted by the campaign to make him unemployed. As reported here last year, Governor Davis vetoed a bill which would have barred making arbitration of disputes a condition of employment. But now thanks to the efforts of the legislature, he will have another chance. Business Insurance notes last Thursday's passage of A.B. 1715 and speculates that Governor Davis' need for the help of organized labor in next month's recall election may influence the way he views the legislation this time.

What a mouthful of initials. However, if you are a regular reader of this site, you probably know what the Older Workers Benefits Protection Act is. Today the 3rd Circuit vacated an earlier decision affirming a release under the OWBPA, after the EEOC joined with the plaintiff in seeking a re-hearing. The basic challenge was that the release was invalid under the OWBPA because it included an agreement not to “file a charge, complaint, lawsuit or other claim against [Lehigh Valley].” Plaintiff and Commission argued that this violated 29 U.S.C. § 626(f)(4), which provides that any waiver will not interfere with the EEOC's right to enforce the Age Act. However, the court held that section is clearly not included in the list of requirements for a valid waiver. It upheld the waiver against that and a number of other arguments. Wastak v. Lehigh Valley Health Network, (3rd Cir. 9/2/03) [pdf].

While this language would seem to give a green light for an employer to include such language, before doing so one needs to pay close attention to footnote 6:

... We note, however, that a regulation that became effective after the incident before us clearly precludes the inclusion of provisions that prohibit resort to administrative process. See 29 C.F.R. § 1625.22(i)(2) (“No waiver agreement may include any provision prohibiting any individual from . . . [f]iling a charge or complaint, including a challenge to the validity of the waiver agreement, with [the] EEOC.”). The presence of such a prohibition in a waiver agreement that is subject to this regulation could certainly lead a court to find, under proper circumstances, that the waiver “ha[d] the effect of misleading, misinforming, or failing to inform” the plaintiff, 29 C.F.R. § 1625.22(b)(4), thus rendering the waiver not “knowing and voluntary,” and, therefore, invalid. But, again, that is not this case.

Short word of advice, review your release in light of not only the OWBPA, but also the EEOC regulations implementing the OWBPA.

Which could seem redundant, but this article by Bill Maxwell of the St. Petersburg Times, points out just one way it is not. He focuses on a recent well publicized case where Applebee's was found liable for discrimination against one black employee by another, on the basis of his color. And according to Maxwell, that is not a new phenomenon.

The Bush Administration's efforts to bring the regulations for white collar exemptions into the modern world would be halted by the Harkin amendment offered by Iowa Senator Tom Harkin. (Any guess how the Presidential Candidate/Senators will vote on this one?) This will be a real battle as both sides look to be inclined to pull out all stops. Organized labor is quick off the mark running advertising in three states with Senators who it thinks would be persuadable, Maine, Missouri and Ohio, and also nationally on CNN. Yahoo News has the story, as well as a link to the new website for those supporting the Harkin amendment, www.saveovertimepay.com. If you just can't wait to see the ad, you can catch a version on the website.

The most recent report from Jury Verdict Research indicates that the median award for employment discrimination cases rose 14% last year to $200,000. Age continues to be the most lucrative claim, with a median award of $266,852. See the Business Wire's story for more information.

Friday, 29 August 2003

Since this was a determination by a judge, not a jury, wouldn't be quite right to call it a million dollar verdict, however Sharon Pollard probably won't mind. Yesterday, the case the Supreme Court used to clarify that front pay awards do not count against the Title VII damages cap, Pollard v. DuPont(U.S. 2001) [pdf] was back in district court. She was there for a hearing on the issue of punitive damages, following a ruling by the District Court that duPont was also liable for intentional infliction of emotional distress which has no caps. The amount of damages, before punitive damages is $2.25 million. Check out the story at GoMemphis.com. Of course, as Ms. Pollard already knows, you can't spend a judgment, but still today she is no doubt smiling.

Thursday, 28 August 2003

Being hit with $9,000 in sanctions for issuing an overbroad subpoena to an internet service provider of your opponent in litigation would be bad enough, but that is just the start of the problems for a litigant and his counsel. In Theofel v. Farey-Jones (9th Cir. 8/28/03) the Court re-instated a cause of action against the two for violations of both the Stored Communications Act and the Computer Fraud and Abuse Act, as well as related state claims. It did affirm the dismissal of the claim under the Wiretap statute. The opinion is noteworthy not only for its liberal reading of both statutes, but its extensions to litigants for reviewing the email 'voluntarily' provided by the internet service provider. Since the ISP acted only because of an obviously overbroad and invalid subpoena, the Court found it did not serve as a protective shield.

This is a good reminder of both the dangers of aggressive litigation tactics and of venturing into another's email, without making sure of one's justification. A lesson that is a good reminder in these days where the two are often combined.

Thanks to be Spacific for a link to a publication by the Privacy Rights Clearinghouse, Small Business Employment Background Checks, which is certainly timely given yesterday's note about increased liability for employers who don't adequately check out prospective employees. One of the challenges is complying with the Fair Credit Reporting Act, a name that has become almost deceptive, since it applies to far more than credit histories, and is something that every employer needs to know about.

The ABA Litigation section completed a survey of members to determine the effectiveness of arbitration as a means of alternative dispute resolution. A rather mixed bag of comments. It would be interesting to see how it would compare with the parties viewpoint. You can check out the Task Force's report here.

Arbitration is by its very nature a contractual agreement of the parties. Unfortunately at the time when it comes into play, there are, again by definition, differences between the parties. Thus there is not always cooperation and harmony even in going forward with the "agreed means" of resolving the parties' dispute. Here, an accounting partnership agreement provided that a dispute between the firm and any departing partner would be resolved by arbitration, with three arbitrators, each of the parties to pay one-half the costs.

After an initial motion to compel arbitration filed by the firm was granted, the partner refused to pay for his share and the arbitration was suspended by the AAA for lack of payment. In Re Burton, McCumber & Cortez, L.L.P (Tx. App. - Corpus Christi 8/25/03). The firm wanted to proceed, presumably as it was seeking some form of relief, but was blocked by the recalcitrant former partner. A second motion to compel him to pay the required arbitration fees was granted by the trial court. When he still failed to pay, the a motion to hold him in contempt was filed. At that hearing, the Court modified its earlier order, finding that the cost would be excessive, and required that the partner pay only half of one arbitrator's fees, with the firm to pay the other half, plus the costs of the two other arbitrators. The request for mandamus by the firm followed.

Noting Texas strong support of arbitration agreements, the Court of Appeals correctly said that the Court had no authority to change the contractual provisions of the parties, thus vacating the trial court's attempted modification. (There is no mention of the Supreme Court's Green Tree decision concerning the cost of arbitration, or any of the cases dealing with fee shifting in the context of statutory claims.) However, in a complicating addition, the Court also held that the trial court had no authority to order the partner to pay his share of the original fees, that was the province of the AAA.

So, after spending two years in the courts, the accounting firm is now back where it started - with a partner who has agreed to arbitrate, but refuses to do so, and no apparent judicial means to compel him to cough up the fees for doing so. Arbitration certainly has its place as an alternative forum, but there are clearly gaps that may no doubt appear at times as bottomless pits of costs and frustration to at least some of the parties.

Wednesday, 27 August 2003

Or at least that's the pitch of Dean Schabner's ABC News story. The money quote comes from who else, a vendor of criminal screening services:

""It's scary simple," suggested Timothy Dimoff, president of Akron, Ohio-based SACS Consulting & Investigative Services, Inc., and a retired law enforcement detective. "[C]ourts are recognizing that it's not hard to check out. … The solution is there. If you want to go back and say they didn't have time to check on an applicant's background, they didn't know the technology existed — the courts are eating them up."

Tuesday, 26 August 2003

Sending a case back to trial solely on the question of punitive damages, the Court notes that intentional discrimination is exactly the type of case where punitive damages are most proper. Che v. Massachusetts Bay Transport Authority Nos. 02-2078, 02-2079 (1st Cir. 8/26/03). Although there is a narrow category of cases where an employer could be guilty of intentional discrimination and yet not liable for punitive damages, this case fits none of those narrow exceptions.

The coordinater of FMLA investigations in Salt Lake City before her retirement in 2002, minces few words in responding to a writer who refers to the FMLA as the "Ultimate Slacker's Law". To quote:

I wish I had a dime for every employer who said they couldn't afford to let someone have a few weeks "unpaid" time off because they needed the person at work. However, they had a new vehicle sitting in the parking lot, a motor home parked at their six-bedroom house for a family of four and were building a mountain home as a "getaway."

I am sure she was more restrained in expressing her viewpoint, pre-retirement.

The Jewish World Review has the story of an action filed by the EEOC against an aircraft manufacturer on behalf of a Mormon who alleges he was terminated because he did not drink.

With no reference to this particular matter, one of the fascinating things about employment law is how almost any issue that could arise in the workplace, seems to ultimately lead to a possible claim of some sort. Whether or not that is progress and the best way for all who have an interest in the workplace, which is pretty much anyone who depends on a job to maintain their standard of living, remains to be seen.

Although the headline and lead paragraph are a little overreaching, the Chicago Tribune article about AOL's desire to have the law clarified that 'volunteers' are not entitled to compensation is a serious issue for companies who use similar individuals. I say the stretched because all the article refers to is comments made by AOL lawyers on the much broader white collar exemption regulations which are under consideration by the DOL. That hardly rises to the level of the implied idea of a special request to the "Bush administration to keep outside the reach of U.S. labor laws". A story dating back from 1999 explains the nature of the issue.

I always like it when we can learn something from the sportspage as it is just one more justification for reading it. In today's world it is where many of the legal oriented stories are found. Dennis Lee's workforce.com article on the importance of nepotism, or more accurately anti-nepotism, policies uses recent collegiate scandals as proof. One only need recite the several instances of coaches hiring their sons, with resultant problems, to get Dr. Lee's point, which is a good one. Closer to home, and going back a few years and one national championship ago, were the problems of the revered Coach Gus of the UT baseball program.

Update: Since I rarely think of nepotism, funny that I should run across two articles in one day. Here from Inc. magazine, a review of a book which takes a different view on the subject than Professor Lee. Actually, it seems as if they are talking about two different issues. Professor Lee about nepotism within an existing organization, and Adam Bellow's, In Praise of Nepotism about family businesses so they are not necessarily contradicting points of view.

Anyone who has read many of my comments will know I have a rather low opinion of the tort of intentional infliction of emotional distress. Its standard is so vague as to be almost meaningless, and while courts most often get it right, sometimes it can itself be used in an outrageous fashion. No more so than in this recent opinion by an intermediate appellate court, Benton v. Simpson, AC 22674 (CT-App. 8/19/03). Under Connecticutt law, plaintiffs were required to show that there was probable cause that they would receive a judgment of a certain amount because of the supervisor's intentional infliction of emotional distress. After two days of testimony, the judge so concluded and awarded an attachment on the equity of the supervisor's home in the amount of $25,000 for each of the four plaintiffs who testified in the hearing. The appellate court brushed aside the defendant's argument that such an action was bad public policy.

This is not to say that the supervisor was a poster child for correct management action, however knowing how different evidence of personal misconduct can sound in the courtroom as opposed to being put in context, I think a decision of this nature, at the pre-judgment stage is truly amazing.

These are the "facts" that the court relied on in making its probable cause determination:

Benton testified that she witnessed the defendant lose his temper six to nine times, including instances such as the following: The defendant displayed anger at her yearly review; used profanity; banged on a filing cabinet; publicly admonished another plaintiff; and made the statements: ‘‘You women make me sick, you’re like a cancer,’’ and, ‘‘Geri, you have Alzheimer’s [disease].’’

Moore testified that she heard the defendant describe the plaintiffs as a ‘‘cancer.’’ Additionally, when Moore disagreed with the defendant’s assessment of the plaintiffs, he made the statement: ‘‘Donna, you are straddling the fence, you will be sore, may even have to take a hot bath tonight.’’

Cifatte testified about incidents of being belittled bythe defendant and stated that he would get ‘‘in your face’’ or ‘‘in your space.’’ At one point, Cifatte relayed to the defendant that her computer was inoperable, and the defendant responded, ‘‘Kim, I am so goddamned sick of hearing about your goddamned computer, if I could shit you out a computer I would.’’ Cifatte testified

that the defendant then hit a file cabinet and stated, ‘‘ ‘let’s take this into my office now.’ ’’‘‘You women make me sick, you disgust me, I feel sorry for anybody that has to work for you.’’

Buonincontra testified that she was present at a meeting where the defendant described the plaintiffs as a ‘‘cancer.’’ She further witnessed the defendant bang his fist to make a point and was a party to an exchange with the defendant when he followed her as she walked away from him and shouted at her."

I think there are more than a few cases where such allegations could be made. Maybe it was just the heat of summer, but this strikes me as incredibly bizarre.

Sunday, 24 August 2003

In her suit against the City of Chicago Police Department, would be officer Kathy Durkin had the following evidence about comments made during her training:

From one of her shooting instructors, "I could teach a fucking monkey to shoot.” Later, after a satisfactory performance by Durkin, the instructor said, “look I taught a fucking monkey to shoot.” The same instructor referred to women as "broads", "fucking broads" and "cunts" in Durkin's presence. And after telling her she would never pass the test or make it as a police officer, he told her that her brain was too small and asked “who did you fuck to get that [college] degree?” When Durkin's husband, already a Chicago detective talked to the instructor, he was told “you have a real blonde on your hands.” And then asked him, “is she that stupid at home?” Soon thereafter he asked her if she “pulled out her witch bag.” After Durkin asked what he meant, the instructor explained “so I hear you told your husband that you’re not going to fuck him unless he came down here and talked to me.”

And others in the department were of the same ilk as the shooting instructor:

Driving with two classmates, one of them unzipped his pants, urinated, and said “suck this.” Another classmate told Durkin that he wanted to get her drunk and “fuck her and lick her all over.”

And yet the result, summary judgment against Durkin on her claims of sexual harassment, gender discrimination and retaliation was affirmed. Durkin v. City of Chicago (7th Cir. 8/22/03).

Given the nature of the testimony, give credit to the City's counsel for good lawyering. The opinion of the Court points out the importance of carefully analyzing each part of a case. Here, there was no tangible job action, since she had been provided more than adequate training. That removed strict liability for sexual harassment. There was no negligence on the part of the city since it was not aware of the conduct because Durkin failed to complain of sexual harassment through the individuals designated to receive complaints. Although she did complain, it was not about sexual harassment. (The only incident of the above mentioned was the 'witch' comment.) With respect to gender discrimination, she did not carry her burden of showing that there were similarly placed males who were treated differently. And her retaliation claim failed because her failure to complain, also meant there was no protected conduct.

Obviously, if summary judgment had not been obtained, this would have been a difficult case for defense counsel to try. But even bad fact cases, with good lawyering and a discerning court, can sometimes be made to go away.

Thursday, 21 August 2003

Stepping gingerly into the world of conflicts of law as applied to covenants not to compete, the 11th Circuit wisely asked the Supreme Court of Georgia for clarification. Having received it, the Court had no problem finding that Georgia would apply its own law to a former employee's non-competition agreement, and find it unenforceable. The employee's victory was not unmitigated however, as the Court struck down the lower court's permanent injunction against enforcing the covenant not to compete in any other jurisdiction. The reach of Georgia's power to enforce its view of whether the non-compete was enforcible extended only to its boundries and the injunction needed to be revised accordingly. Keener v. Convergys, Inc., No. 02-11324 (11th Cir. 8/21/03).

Nothing is worse (well almost nothing) than being told that it is really a close call, before the Court says - "you lose". That was what happened to the defendant as it argued that it should be entitled to summary judgment because the Airline Deregulation Act pre-empted the Florida whistleblower statute, which was the only cause of action brought. Close, but no cigar, or words to that effect, according to the Court. Branche v. Airtran Airways, Inc., No. 02-14920 (11th Cir. 8/21/03) [pdf].

Utilizing a common settlement technique in consumer class actions, a grocery chain has settled a gender discrimination case for $3.1 million, but $500,000 of that will be in grocery coupons good at, yep Kash N Karry. The AP wire has the story here. I am not sure I know of a case where coupons have been used to settle an employment discrimination case.

It is also something that will not be happening in Texas state courts, at least unless the lawyers for the class are willing to take their fees in coupons as well. That's one of the many, many provisions in HB 4, the tort reform legislation passed by the Texas legisature in its last regular session. Check out new Section 26.003(b) of the Civil Practice and Remedies Code which really puts the burden on the Texas Supreme Court to implement rules by 12/31/03 which will provide that

Rules adopted under this chapter must provide that in a class action, if any portion of the benefits recovered for the class are in the form of coupons or other noncash common benefits, the attorney's fees awarded in the action must be in cash and noncash amounts in the same proportion as the recovery for the class.

Haggar, which has seen more than its fair share of workers compensation retaliation claims in its border area plants, has another unpleasant visit to the courthouse in Haggar Clothing Co. v. Hernandez (Tex. App. - Corpus Christi 8/21/03). Here its active workers compensation claims management policy which included having a nurse accompany workers to doctor visits and a safety policy which gave awards for the absence of lost time injuries, were used to support the malice necessary for punitive damages. Additionally, the trial court allowed testimony by other employees who were employed at the same plant during the same time period to testify about their own experiences and in fact instructed the jury that the termination of other employees could be considered in assessing punitive damages. This case exemplifies how good "control" policies can be spun another way. This time with a nasty result.

Wednesday, 20 August 2003

Following a detailed rendition of the troubles that occurred following his complaints of racial remarks, the 9th Circuit has no trouble in finding that plaintiff was retaliated against for raising them. In addition to making you want to be careful about driving through certain parts of Oregon, it is another example of where the proximity of the retaliation to the protected conduct was sufficient to support the jury's finding of retaliation. Bell v. Clackamas County (9th Cir. 8/20/03). Since the retaliation case was clear, the Court did not need to review the racial discrimination finding since the damages would have been redundant.

Even though the jury had awarded punitive damages, they had been reduced by the district court. The 9th Circuit, remanded finding Desert Palace v. Costa's holding on the sufficiency of circumstantial evidence applicable to the award of punitive damages as well as liability. It also charged the lower court to review the amount of damages assessed againt the individuals on an individual basis, rather than as a group. And as a break for the plaintiffs' attorneys who had seen their hourly rate reduced to $175 from $200, the Court ordered that it be restored to $200 an hour, or at least reconsidered without relying on an unpublished opinion that had set the lower rate.

It wasn't a good pleading day for the plaintiff when he failed to allege with sufficient specificity the fraudulent certifications that he claims his employer had made to the government. Holding that a plaintiff under the False Claims Act has the same level of pleading required by FRCP 9(b), the court affirmed the dismissal of his claim for failure to state a cause of action. Yuhasz v. Brush Wellman, Inc. (6th Cir. 8/20/03). He had no better luck on his whistleblowing claim since the Court found he had not sufficiently alleged his employer was aware of his protected activity when he was terminated. Noting the difference between advising the employer that its conduct was improper and could lead to penalties under the False Claims Act, with advising the employer that he intended to bring a claim under the FCA, the Court held that since he was the one most responsible for monitoring and notifying the employer of problems, he was only doing his job by bringing this to the employer's attention. For someone whose job it is to monitor compliance, it must be clear to his employer that he is pursuing a complaint against the company in order to raise the protection of the whistleblower statute.

Adding salt to the wound, the Court found that plaintiff's claim that he had not been allowed to amend his complaint in response to the 12(b)(6) motion to dismiss was invalid because it was unnecessary. Since the Rule 12(b)(6) motion was not an answer, and an answer was never filed, he retained the right to replead without permission of the court pursuant to Rule 15(a).

In the era of whistleblower as hero, this might be viewed as an unusually tight reading of the generally liberal pleading requirements.

Tuesday, 19 August 2003

No surprise except for the lengthy time period before this precise question got to the 7th Circuit. Can an at will employee bring a § 1981 claim, which must be founded in contract? Yep. Walker v. Abbott Laboratories, Inc. (7th Cir. 8/18/03) [pdf]. Fellow '75 UT Law School Classmate, Circuit Judge Diane P. Wood was on the panel, although not the author.

Today's 3rd Circuit decision is a good lesson in the dangers of letting a policy age without keeping it in tune with the times; although more accurately in this case a lesson in how long it sometimes takes to get matters resolved through litigation. Here the arbitration agreement in questions was signed in August, 1996 and referred to 1993 rules of the AAA. The disputed employment actions occurred in December 1996 and early 1997. Perhaps not surprisingly for an arbitration agreement of those times it allowed only a 30 day statute of limitations, limited remedies to actual damages, and required the loser to pay for all costs of the arbitration. Unfortunately, measured by 2003 standards it was (no doubt correctly) found to be both procedurally and substantively unconscionable. Alexander v. Anthony International, Inc. (3rd Cir. 8/19/03) [pdf]. The most serious difference was whether or not these elements could be severed thus leaving an enforceable agreement. The majority held they could not, the dissent would at least have sent it back for a further look. So, although through no apparent fault of the employer's, a case begun amost seven years ago now heads for its first determination on the merits. Not an ideal way to run a railroad, or more accurately, a justice system.

The Belfast Telegraph has the story of the plans of a number of employers who are either asking or considering asking their employees whether they are gay or lesbian in advance of the effective date of the Employment Equality (Sexual Orientation) Regulations 2003. Some gay advocacy groups are less than thrilled with this tactic.

Sunday, 17 August 2003

All was not harmony on the island paradise of Hawaii as two lower level employees prepared to compete with their employer before leaving their employment. Mere preparation was not a problem, but actually submitting a competing bid for a government contract and winning while still employed was. At least that is how the 9th Circuit thought the Supreme Court of Hawaii would rule. In Eckard Brandes, Inc. v. Riley et al ((th Cir. 8/11/03) [pdf] the court found that the violation of the duty of loyalty would create a cause of action, that it would be governed by the six year statute of limitations and that disgorgement of the profits on the government contract was a proper remedy. What is interesting is not only the 9th Circuit's enforcement of the duty of loyalty against lower level employees, but the irony that it was the employees' lawsuit for wage and hour violations that led to a counterclaim for the breach of the duty of loyalty. A good example of why one should think twice of one's own conduct before initiating litigation.

Since the Fourth Circuit is generally a favorable forum for employers, its decision in Rowland v. American General Finance, Inc. (4th Cir. 8/12/03) [pdf] may well be a harbinger of how the revival of the mixed motive discrimination case by the Supreme Court in Costa earlier this summer may change discrimination litigation. Here the court waited on the Costa decision before reversing the jury verdict in favor of American General because the court had not given the requested mixed-motive instruction. Although you could argue that the plaintiff had submitted direct evidence of discrimination that would have entitled her to such an instruction even under the standard used prior to Costa, it is quite clear that the Fourth Circuit views the Supreme Court's decision as a significant change in how cases must be viewed. Although warnings of dire consequences of decisions occur far more often than do the consequences, this time may be different.

This case demonstrates the importance of collegiality and professionalism among members of the Bar. Collegiality and professionalism can obviate unnecessary court intervention, needless expense and fees for clients, and protracted legal proceedings. Zealous advocacy on behalf of one’s client does not excuse a belligerent and uncompromising approach to the discovery process.

A defendant loses a quick victory when the appellate court reverses a trial court's dismissal of a Title VII lawsuit with prejudice because the plaintiffs filed their suit before filing their EEOC charge. LeBron-Rios v. U.S. Marshall Service (1st Cir. 8/14/03) Although it might not always be the case, here it was meaningful since there was still time to file a timely charge with the EEOC.

Friday, 8 August 2003

Or at least that seems to be the trend. Jennifer Barrett's Newsweek story, which can be found here, surveys the changing landscape from the perspectives of employment lawyers, law professors and the growing presence of Employment Practices Liability Insurance providers.

Thursday, 7 August 2003

Another court holds that an employer who retains an unrestricted right to amend an arbitration agreement ends up with an agreement that will not be enforced. In Re: Jobe Concrete Products, Inc. (Tx. App. - El Paso 7/31/03). The Texas Supreme Court has already approved a way for an employer to maintain the flexibility to modify a plan and still have it enforcible in In Re: Halliburton Company:

Myers also asserts that Halliburton's promises were illusory because the company retained the right to modify or discontinue the Program. But the Program also provided that “no amendment shall apply to a Dispute of which the Sponsor [Halliburton] had actual notice on the date of amendment.” As to termination, the plan stated that “termination shall not be effective until 10 days after reasonable notice of termination is given to Employees or as to Disputes which arose prior to the date of termination.” Therefore, Halliburton cannot avoid its promise to arbitrate by amending the provision or terminating it altogether. Accordingly, the provision is not illusory.

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Once plans are drafted it is important to make sure that they stay in sync with developing law.

Upholding a district court's finding that the EEOC had failed to engage in reasonable efforts to conciliate before filing suit, the 11th Circuit affirms the dismissal of the EEOC suit and the award of attorneys' fees to the employer. EEOC v. Asplundh Tree Expert Co (11th Cir. 8/7/03) [pdf]. After taking three years to investigate a charge, the EEOC issued a cause finding and then gave the employer 12 business days to respond to a proposal for a nation wide conciliation decree. When the company retained local counsel and responded one day after the EEOC's arbitrary deadline, the EEOC declared conciliation had failed and filed suit. The Court surmised out loud that perhaps the reason that the Miami office of the EEOC had done so was that conciliation was private, while a lawsuit would allow for publication of what were perhaps newsworthy allegations. This was borne out by an article in the New York Times which the court mentions in a footnote "inaccurately suggests that an Asplundh employee placed a noose around Lewis’ neck." The article which has been saved in a Yahoo group, reports on a number of suits brought around the country by the EEOC where "nooses" were involved.

Although obviously a serious matter, the facts as relayed in the decision make it clear that even if the event did happen, which was disputed, the employee who did it was a city inspector, not an employee of Asplundh, and when the employee complained to his supervisor, he arranged for a meeting with the inspector who apologized for any offensive conduct, and according to the employee no further events occurred. When the EEOC fails to act appropriately in these type of cases, and in fact engages in overreaching conduct, it hurts its credibility in dealing with cases where there is legitimate cause for action. And in that event, everyone loses.

A redi-mix driver fell in a hole and suffered severe nerve damage which resulted in a number of physical problems. He was terminated because his restrictions, including the inability to lift more than 50 lbs, left him unable to perform his redi-mix driving job. He sued saying that he was discriminated against because of a disability. The court's decision is a good study in how an ADA case is evaluated by the courtw. Wood v. Crown Redi-Mix, Inc. (8th Cir. 8/7/03) [pdf]. He alleged that he was disabled because of limitations with respect to walking, standing, turning, bending, lifting, working and the ability to procreate. The trial court granted summary judgment for the employer on all claims. The 8th Circuit affirmed the claims on the basis of walking, standing, turning, bending, and lifting by evaluating them in light of what it called the "high bar" set by Toyota Motor Manufacturing, Kentucky., Inc. v. Williams (U.S. 2002), which requires that an individual must have an "impairment that prevents or severely restricts the individual from doing activities that are of central importance to most people's daily lives." Measured against that standard, although the court characterized the restrictions as moderate, they were not severe. With respect to working, he could not show that he was limited to a substantial range of jobs.

Although hesitant to do so without additional proof, the court accepted for purposes of this case Wood's unsupported assertion that the injury had left him unable to procreate, therefore making him disabled under the ADA (impairment of the major life function of procreation). Even accepting that, the court still affirmed summary judgment, holding that since his inability to procreate had nothing to do with the accommodation that he was requesting, he failed to establish a prima facie case under the ADA. To so hold the court found, "would be a strange result, and one we do not believe Congress intended, to have the viability of Wood's claim that he should have been accommodated as an employee of a truckdriving company turn solely on whether or not he was impotent."

Comes from an article in Australia's CIO Magazine. Although written from down under the article has great relevance for all organizations. And it ends with a Top 10 Tips for Effective Electronic Data Managment.

Always plenty of folks willing to comment on a topic, and that results in the article on touching run by the Cox News service. You can see it here at the Springfield Sun website. This story was inspired by the allegations against the now confirmed gay Episcopalian bishop, that he inappropriately touched another man at a church function. It turned out those touches were on the arm and back and in full view of a number of other people. Nevertheless, some of the quoted wisdom summed up by the headline, can't just be scoffed at given todays litigious society.

Incidentally, the Mail & Guardian seems to have already promoted Gene Robinson to archbishop. See the headline here, although that error is not repeated in the main story.

Tuesday, 5 August 2003

So did I. Last Friday I commented here on a near 1 million pound award to a broker in London who was bullied by his boss, and jokingly remarked that I couldn't wait for the cause of action to cross the Atlantic. It was the other coast I should have been worried about. Check out the website of, I kid you not, The Workplace Bullying & Trauma Institute, which is seeking backing for legislation offered earlier this year in the California legislature which it claims could be the first anti-bullying legislation in the country. You can read the details of AB 1582 here. Truth is stranger than fiction.

David Bernstein over at the Volokh Conspiracy has an interesting post on EEOC action against foul language emanating out of its Cleveland office (the action, not the foul language) and some other ironies in the evolution of the law of sexual harassment, including a quote from South Park.

well, what you would expect. See the opinion piece in the Sacramento Bee. Ultimately, the dispute over arbitration as a condition of employment is part of the ongoing tension over the balance of control over 'a job' between the entity that provides the employment and a potential employee. Clearly society no longer is willing to give employers unfettered discretion even over private jobs, so the question becomes how much control it will demand and how much the system will permit.

Monday, 4 August 2003

The first employment law initiative passed under the Clinton Administration, the Family & Medical Leave Act, turns 10 tomorrow. Signed by President Clinton in February, 1993 it was effective on August 5 of that same year. The Society of Human Resources Management marks the anniversary with a continuing initiative seeking clarity on some of the more troublesome provisions. See the story here. For more in depth information see the website of the FMLA Technical Corrections Coalition, a group of corporations seeking similar changes.

Sunday, 3 August 2003

Outsourcing computer and other white collar work has been much in the news lately. See one of my earlier comments here. But when the blogging world of consultants start talking about unions as a possible answer, see for e.g. Duffbert's Random Musings, even if they are not now in favor, I would suggest that management in the high tech world keep their ear to the ground. Or more literally, their eyes on the net.

Highlighted by some intra-court sparring between Judges Posner and Easterbrook, two of the court's brightest intellects, the majority opinion written by Judge Posner enforces a Board order that a non-union employer violated the NLRA when he discharged six employees who walked off the job to protest the incompetence of a supervisor. Trompler, Inc. v. NLRB (7th Cir. 8/1/03). Reading Judge Posner's opinion, with a gentle chide at his colleague's concurrence, and that opinion by Judge Easterbrook gives a good review of the complexity of issues as to what conduct is protected and what is not when it comes to protesting a supervisor's actions.

And in the middle of it all, Judge Posner as he often does, has a great money quote, this time about the model of labor relations:

The National Labor Relations Act models labor relations as tests of strength between workers and management. Workers withhold or threaten to withhold their labor in order to impose costs on management that will induce management to improve the workers' 'terms or conditions of employment,' and employers if they don't want to knuckle under to the workers' demands can try to impose costs on the workers by locking them out, laying them off, and hiring permanent replacements. [cite omitted] This 'combat' model of labor relations does not sort well with a requirement that the combatants act reasonably.

Although it is the amount of the damage award that gets the most attention from the press, and initially even the parties, that is a long way from establishing the true hard dollar cost of employment litigation. Where attorney fee shifting statutes are involved, as with Title VII and many others, a liability finding then becomes an invitation for a second inquiry as to the amount of attorneys fees. How expensive can that be? Take a look at a case that has been working its way through the judicial system since the case was filed in 1994. After two jury trials (a motion for new trial was granted on the first), a jury awarded $60,000 for disability discrimination to the plaintiff. The judgment entered by the court included attorneys fees, interest on the attorneys fees and costs in the amount of $554,672.21. Shott v. Rush-Presbyterian-St. Luke's Medical Center (7th Cir. 8/1/03). This was a one-third reduction from the amount sought by the plaintiff.

The appellate court dealt with a number of unusual issues. Among them: it found the trial court should not have awarded fees for the first trial, since the error which caused the need for the second trial was the plaintiff's faulty trial strategy which prejudiced the defendant. It did find it was proper to allow fees for the preparation for the first trial since it undoubtedly was helpful in the second trial. It found the court correctly did not discount because the plaintiff had rejected a settlement offer near the start of the litigation which defendant argued was little more than what she won. This was true only when one took into account the impact of the Alternative Minimum Tax on the plaintiff. Fortunately for both courts and lawyers, the court held that parties and lawyers are not required to take into account the tax consequences when making decisions on settlements. The court also held that the award of interest on the attorneys fees was an appropriate way to compensate for the delay in payment.

Still nine years after the case was filed, it is sent back to the trial court for one more round of judicial tweaking on the issue of attorneys fees. With what may have been tongue in cheek, the court noted that fee litigation has added a "heavy burden" on the federal courts. Given the likely impact of the recent Desert Palace decision which may well result in more trials and more fee disputes, the burden is likely to get heavier.

So when this one gets written up as "just a $60,000" award, care should be given to remember the ultimate amount of attorneys' fees and interest the defendant gets to pay to the plaintiff's counsel, plus the unknown number it has paid to its counsel over the past nine years.

A Baltimore federal jury has sided with retired corrections officer Mathen Chacko last week when it found he had been harassed because of his national origin. The SunSpot has the story about a long history of complaints of treatment at the hands of his fellow officers, which went uncorrected.

Declining an invitation to read the Faragher/Ellerth decisions narrowly, the 5th Circuit held that the affirmative defense is not available when the harasser is at a high enough level so that his or her conduct is a proxy for the conduct of the company. Under such circumstances, the company is vicariously liable. Ackel v. National Communication, Inc. (5th Cir. 8/1/03) [pdf]. In making this determination, the court noted it was following the lead of the 7th Circuit in Johnson v. West (7th Cir. 2000). The three judge panel, including a 9th Circuit judge sitting by designation, reversed a summary judgment and remanded to the trial court for a determination as to whether or not the alleged harasser was in fact a proxy for the company.

In this case, the harasser was the general manager, 2% stockholder and member of the board of directors of the employer, Fox 29 in Lake Charles, LA. Although the defendant had maintained that with only 2% stock ownership he could not be a proxy, the court held that ownership was irrelevant, it was his position of control and authority that would determine his status.

The court did reaffirm the 5th Circuit's position that paramour discrimination is not a viable cause of action because it is not based on gender, but on favoritism which impacts both sexes equally. Additionally, the court upheld the summary judgment for the retaliation claims.

Although not applicable to a large number of cases, for sole owners and very high level executives in companies, this case makes definitive what had appeared clear from the original Faragher/Ellerth decisions, your conduct puts the company at risk, beyond the saving grace of a well implemented sexual harassment program.

Madison, Wisconsin has its own Title VII type ordinance which includes physical appearance as a protected category. Sam's Club's prohibition against nose rings or other facial jewelry ran squarely against Tonya Maier's desire to wear a ring through her eyebrow to work, which ultimately led to her discharge. Although she convinced the Madison Equal Opportunities Commission that she had been discriminated against, when the Commission pursued judicial enforcement on her behalf, it was not so successful. The trial court, after considering expert testimony on the type of image that Sam's Club was trying to present (conservative), found it had established the affirmative defense in the statute. Sam's Club v. Madison Equal Opportunities Commission (Wisc. Ct. App. - 7/24/03). The defense allows rules if there is a reasonable business purpose.

Maybe it's the heat of summer, but it sure seems that there are a lot of cases recently which do nothing to bolster one's confidence that we have our priorities straight in the ways judicial resources get allocated. Which is not a comment at all on the judiciary who must deal with what comes before them.

Not all that often that one of our own, a management side employment lawyer, is confirmed to the bench, but the Senate's action late last night did just that when it confirmed Xavier Rodriguez, to the United States District Court for the Western District of Texas. He will sit in San Antonio, replacing Judge Ed Prado, who is now on the Fifth Circuit. Judge Rodriguez had earlier served on the Texas Supreme Court. The Austin American Statesman has this report on his confirmation and his biography submitted to the Senate can be found here. Supported by both sides of the employment bar, Judge Rodriguez is an excellent addition to the bench.

Or at least check with Brevard County to see how it is working for them. They are one of the first in the country according to this article in InformationWeek. The particular technology being used, bioLock, uses fingerprints to control access to sensitive documents.

He said sarcastically, in light of yesterday's near 1 million pound award to a former broker employed in the London office of Cantor Fitzgerald, the U.S. company heavily hit in the 9/11 attack on the World Trade Center. The report on the website of Croner Consulting sounds closest to the U.S. tort of intentional infliction of emotional distress or outrage. It is a slippery slope when we start using lawsuits to determine what is civil behavior and what is not. Of course we started on that course some time ago.

The trial court has now given its view that IBM's 1995 conversion to a cash-balance plan was illegal. The Forbes headline, IBM loses pension plan lawsuit, will appeal is the succinct bottom line. For more in depth coverage check out the first of what I am sure will be many more posts in the Benefitsblog.

Thursday, 31 July 2003

Although it took 3 tries to get summary judgment on its laches defense, Caterpillar was able to have it upheld on appeal. Smith v. Caterpillar, Inc. (7th Cir. 7/31/03). The Court noted not only faded memories and lost witnesses, but the inevitable destruction of documents as well as the increase of exposure in back pay as the sort of prejudice that coupled with inexcusable delay was sufficient for laches. The delay was occasioned by plaintiff fully pursuing her claim of discrimination through the Illinois administrative process and then dropping it two days before a hearing to pursue her Title VII claim. Even then it took her over a year to get a right to sue letter from the EEOC. Her initial charge was filed on March 20, 1991, her law suit on August 17, 1999. From there, after the 3 summary judgment attempts, the appeal was argued on May 30, 2002 and decided more than a year later. All in all quite a judicial ride for some one who worked only as a probationary employee for 60 days. Any wonder why employers question the credibility, not to mention the cost, of the system?

A former Baylor employee complained that his termination was because he had opposed gender discrimination against one of his colleagues. Following a 10 day trial the court submitted a retaliation question asking only if his opposition to gender discrimination had been a motivating factor in his termination. The jury answered "no". He appealed arguing that the court should also have submitted another element, that his termination was because he had "testified, assisted or participated in any manner in an investigation, proceeding or hearing." Although he had not done so, he argued that Texas should recognize a theory of "perceived" participation as recognized in Fogleman v. Mercy Hosp., Inc., 283 F.3d 561 (3rd Cir.), cert. denied (2002). Under that theory, if the employer terminated him in part because it perceived" he had participated that would be illegal under the TCHRA. In Salay v. Baylor University (Tx. App. - Waco 7/23/03) the Court of Appeals wisely chose not to adopt that rule, noting no other Texas court had done so.

Thanks to a Texas Lawyer email for picking this case up. While I routinely check the Texas Courts of Appeal, the Waco court is the only one that does not regularly post its decisions on its website.

Wednesday, 30 July 2003

Noting that it was perhaps opening a wide door, nevertheless the 9th Circuit finds that a cause of action under Section 503(b) of the ADA which prohibits interference with the exercise of rights under the ADA is distinct from, and broader than a cause of action for retaliation under Section 503(a). Brown v. City of Tucson, (9th Cir. 7/30/03) [pdf]. Although summary judgment for the City was upheld on the retaliation claim under the burden shifting analysis of McDonnell-Douglas, the same analysis did not apply to the interference claim. Nor does it equate to a hostile environment claim, which would require a finding of an adverse employment action. The most applicable standard is that found under the Fair Housing Act, which has an identical provision. Unfortunately, that standard does not give much guidance for its application under the ADA. At a minimum however, where as here there were allegations of threats for exercising her rights under the ADA, in this case being threatened with adverse action if she did not give up the accommodation for her disability, it is sufficient to survive summary judgment under Section 503(b). It would be a surprise if the Supreme Court were not given a chance to shut this door that the 9th Circuit may well have opened.

When plaintiff made his prima facie case of age discrimination in failing to rehire him after he had been riffed, the burden shifted to the employer to provide a legitimate explanation. Unfortunately, it originally took the position that it had a policy of not rehiring drivers who had been let go in a reduction force in both an administrative proceeding, their answers to discovery and in their initial brief on summary judgment. On their reply brief, they introduced a second rationale, that they only hired from union referrals. And just to make matters worse, at oral argument they tried to make a third argument. The conflict between the different rationales was enough for the court to feel the their justification was "fishy" and reverse the summary judgment below. Zaccagnini v. Chas. Levy Circulating Co. (7th Cir. 7/29/03) [pdf].

Today's suit is against the LA Clipper's owner Donald Sterling. According to the AP story Sumner Davenport, a former property supervisor at his Beverly Hills Properties accused him of "unwanted and offensive physical conduct" that included hugging, kissing and touching her chest. Yesterday the sexual harassment suit of the day was by the former VP of Human Resources for the Atlanta Falcons, Carol Faubert, who complained that team owner, Arthur Blank, condoned a work climate in which female employees were treated as "sex objects." See ESPN's story here. It should be noted both were terminated employees, and although Sterling was unavailable for comment the Falcons' position was clear: "This lawsuit was filed by a disgruntled former employee whose objective is obvious: to threaten public embarrassment as a means of extracting unwarranted personal gain," according to Susan Bass the Falcons Vice President for Community Relations.

Tuesday, 29 July 2003

Child labor laws are a serious matter, but when stories like Labor Officials Crackdown On Grandma's Helpers appear it can make people wonder where common sense went. According to the Chicago NBC affiliate, Illinois labor officials have said that two granddaughters who helped their grandmother out at her second hand store by sweeping the floor and occasionally washing the windows in return for candy, can't be paid, even in candy. Glad that those officials had their priorities straight.

Monday, 28 July 2003

Last Friday was the first anniversary of Sarbanes Oxley legislation, at least the day Congress passed it. S-O was a major rewrite of corporate governance laws, but also included significant employment law aspects. It was easy to forget the day of its passage since the corporate scandals have been crowded off the front page of the paper. According to the Chicago Tribune story the authors of the legislation are happy with progress but still believe that much work needs to be done to complete the job. We can celebrate the signing of the legislation this Wednesday.

Sunday, 27 July 2003

According to the Labor Policy Association in HR Policy News the vote on Health and Human Services appropriations has been put off until after the Senate's August recess. The Harkin amendment to the appropriations bill would effectively kill the proposed white collar regulations of the Department of Labor. You can anticipate a considerable amount of lobbying of wavering Senators during the month of August.

Whether or not a defendant can get summary judgment is at the heart of most of employment cases. Once summary judgment is defeated, a new calculus enters into the settlement discussions, the jury. The Supreme Court's decision in Reeves v. Sanderson Plumbing Products, Inc., (U.S. 2000), was widely seen as making summary judgment more unlikely. It held that it was sufficient to defeat summary judgment if you could establish a prima facie case and had some evidence of pretext.

However, part of the decision gives courts wishing to grant or uphold summary judgment some room, and an opportunity to evaluate the evidence, even on summary judgment:

Whether judgment as a matter of law is appropriate in any particular case will depend on a number of factors. Those include the strength of the plaintiff's prima facie case, the probative value of the proof that the employer's explanation is false, and any other evidence that supports the employer's case and that properly may be considered on a motion for judgment as a matter of law.

In Girten v. McRentals, Inc. (8th Cir. 7/25/03), the Court did as suggested in evaluating the proof of plaintiff's age case. Noting there was only a 9 year age difference between the plaintiff and the replacement (62 to 53) the Court concluded the prima facie case was weak, and that there was little in the way of evidence that the reason given for the termination was not truly believed, even if it may have been wrong. In short, after quoting the Reeves language above, the court upheld summary judgment holding, "Because the plaintiffs have not made a strong prima facie case and the evidence of pretext is virtually non-existent, no reasonable trier of fact could conclude that the defendant discriminated on the basis of age." One more summary judgment survival.

With two highly publicized events this past week, the city council member in New York and the shooting of three co-workers by a real estate sales agent, even closer in San Antonio, this article from the Oregon Bend Bulletin has a survey of how different companies plan to respond to the problem. On the day after the San Antonio shooting Dr. Dennis Davis, a friend, great speaker and expert on the workplace violence spoke at the TAB annual Employment Relations Symposium. One thing he found employers reluctant to do was get law enforcement involved in work places incidents where there was a threat or slight injury. Something he suggested should change.

Friday, 25 July 2003

Timely issue since I just spoke at the Texas Association of Business Employment Law conference this morning on drafting arbitration agreements. I could have thrown in today's decision in McMullen v. Meijer, Inc. ((6th Cir. 7/25/03) where the Circuit Court reversed the trial court's order compelling a termination dispute to arbitration. The employer's arbitration agreement let it pick a panel of five potential arbitrators (who had to meet certain restrictions) and then allowed the final choice by alternate striking. Too much control to ensure that the employee's rights would be sufficiently protected in the arbitration process.

Headline pretty well says it all, except to let you know that Local in this case means Los Angeles. The suit was brought under the California statute prohibiting discrimination on the basis of sexual orientation. The AP story is running on several sites, including the local NBC affiliate. First Million Dollar Verdict in some time.

That's the question former Brobeck employees would like to have answered. Their contention is that it is Morgan, Lewis which hired a number of Brobeck lawyers and continued to work on a number of Brobeck files. The lawyer representing the former Brobeck employee's who are seeking their 60 day notice pay under the WARN act is wondering about whether Morgan Lewis continued working on Brobeck files without getting consent from the clients, which would add weight to his argument that it is a continuing employer. Law.com has the story.

Thursday, 24 July 2003

Turning down an invitation to read the requirement that an employee must be prove he has been disciplined or discharged in order to make a prima facie case of religious discrimination, the court in Goldmeier v. Allstate Insurance(6th Cir. 7/24/03) upheld a summary judgment for Allstate because there had been no discharge or discipline. The Court also rejected that the employees had been constructively discharged when they quit 53 days before the policy they were complaining about went into effect.

Spurred by a highly publicized IBM internal communication, recent stories have highlighted the number of primarily high tech jobs being shipped offshore. Now an Information Weekstory considers the best way to deal with the human relations issues taking such action causes.

Hawthorne alleged that his employer required that he and his crew smell water samples for the presence of ammonia and when he refused to do so, he was terminated. In his opinion this created a Sabine Pilot cause of action, that the sole reason for his termination was the refusal to commit a criminal act. The company filed and won a traditional summary judgment. Unfortunately, it was reversed by the appellate court, and the Supreme Court refused to hear the case.

Back in the trial court, the company tried a second motion for summary judgment, this time using both the traditional and the still relatively new no-evidence summary judgment now permitted by the Texas Rules. The latter proved to be the key to success as the both the trial court and the appellate court found that Hawthorne had failed to offer any evidence that requiring the employees to smell the water samples was in any way linked to a criminal statute. Hawthorne v. Star Enterprise (Tx. App. - Amarillo 7/23/03). In addition to showing the value of the no evidence summary judgment procedure, this case shows how the different workloads in the various appellate courts of Texas can cause a matter to be shifted around the state. The lawsuit was filed in Beaumont, but the initial appeal went to Texarkana, and this most recent decision was by the Amarillo Court of Appeals. It could be that the final word comes from Ausint, but my guess is that the Supreme Court will decline a second time to review the case.

The Austin Court of Appeals establishes an important precedent for the Texas law of arbitration in finding that arbitrators are entitled to immunity from lawsuits similar to the immunity that judges have. The court found this broad based immunity is important to the arbitration process as a whole, which is in accord with the public policy of Texas. The need to decide this issue arose when Blue Cross challenged an arbitrator's failure to disclose his prior association with the counsel for one of the parties and sought to recover its attorneys fees from the arbitrator personally. (The court also questioned whether it was really an attempt to set aside the award.) Blue Cross v. Juneau (Tx. App - Austin 7/24/03). If this decision had gone the other way it would have caused havoc to employers wanting to resolve disputes through arbitration rather than litigation.

Wednesday, 23 July 2003

Chevron scored a landmark victory in the U.S. Supreme Court by validating the EEOC's regulation that direct threat includes a threat to the employee as well as to others, even though the ADA did not contain that specific language. Chevron v. Echazabal (U.S. 2002). They were less successful in convincing the 9th Circuit that their summary judgment granted on that basis should be upheld.

In today's decision in Echazabal v. Chevron (9th Cir. 7/23/03) [pdf] the Court found there were factual issues on whether Chevron made its decision “based on a reasonable medical judgment that relies on the most current medical

knowledge and/or on the best available objective evidence.” Chevron did convince one judge of the panel who filed a vigorous dissent, but unfortunately, must now start over in the trial court.

Emphasizing what my procedure professor said, "there's no cash register at the back of the court room," the judge who presided over the whistleblower claim of Thomas Dunn against Enterprise Rent A Car yesterday set aside the jury's verdict and entered judgment for Enterprise. According to the story in the St. Louis Post Dispatch the judge set aside the verdict because the plaintiff had not shown Enterprise violated any statutory prohibition. Plaintiff's counsel argued it only requires a good faith belief on the part of the employee to state a cause of action. Plaintiff will apparently get their chance to press that argument on appeal.

Tuesday, 22 July 2003

Today's decision in Palmer v. Pioneer Inn Associates, Ltd. (9th Cir. 7/22/03) [pdf] makes two interesting points. Plaintiff had applied for and was initially offered a job as a deli server, waitress and ultimately a supervisor, before being told that she could have none of the three because she was pregnant. The trial court granted summary judgment on the waitress and supervisor position because she could not establish a prima facie case under McDonnell-Douglas . She lost on the deli server position when the case went to trial because testimony by a management level chef was excluded as a sanction for plaintiff's counsel ex parte contact with him.

In the trial court's view, the chef was a 'represented party'under the ethics rule. The 9th Circuit, certified the question to the Nevada Supreme Court which in its opinion adopted a narrow view of management officials who are covered by the rule. The Nevada Supreme Court now uses the managing-speaking agent test, which requires that the individual be able to "bind" the company in a legal sense. Finding that the chef did not meet that test, the 9th Circuit ruled the exclusion of the chef's testimony as a sanction was improper and reversed the jury's finding of no liability on the deli server position.

The second interesting facet is the important distinction between direct and circumstantial evidence. The court reversed the summary judgment of the company on the waiter and supervisor position, finding that the plaintiff had not been required to make a prima facie case under McDonnell-Douglas since she had offered sufficient direct evidence. Her testimony that an agent of the restaurant told her that his boss had overruled his hiring of her because she was pregnant was sufficient to allow her case to go to the jury.

Circuit City which has become the poster child of arbitration enforcement litigation has suffered another hit in today's decision by the 9th Circuit. Circuit City Stores v. Mantor (9th Cir. 7/23/03) [pdf]. Deciding strictly under California state law, thus avoiding the question of whether or not Duffield would preclude the plaintiff's Title VII claims, the Court found even the revised arbitration agreement of Circuit City was both procedurally and substantively unconscionable and thus could not be enforced.

Although some of the items could be cured by revised drafting and the involvement of a neutral third party at an earlier stage, it seems that some of the conditions the court would impose for a valid agreement will be almost impossible to meet in the typical "arbitration as a condition of employment" case. It appears that the issue of arbitration of employment law disputes will remain a muddle in California for some time to come.

An interesting blog, Out-of-the-Box Lawyering has a comment and link to a 9th Circuit affirmation of an unusual sanction of $5,000 to the plaintiff for the pain and suffering caused by the embarrassmentt of having details of her sexual practices offered into evidence. An offer the Court held could only have been a knowing violation of Rule 412, which sets out strict procedural requirements before such testimony is proffered. The Court also awarded $5,000 as attorneys fees. Although no doubt the plaintiff's name will be recognized by those actually familiar with the case and the employer, she is fortunately spared further ignominy by the use of only her initials on the published appellate decision.